State Closes Investment Firm Suit Claims Orlando Company Defrauded 220 Of $2.18 Million

May 30, 1986|By Suzy Hagstrom of The Sentinel Staff

The Florida comptroller's office closed an Orlando investment company Thursday, accusing it of defrauding about 220 investors of $2.18 million.

At the request of the comptroller's office, an Orange County circuit judge ordered Inter-American Business Consultants & Associates Inc.; its president, Clara M. Lamstein; and Charles Rouse, a salesman, to stop violating state securities laws. The judge also froze the company's assets and appointed William Rishoi as a receiver of the company, which has an office at 1011 E. Colonial Drive.

Comptroller Gerald Lewis, during a press conference Thursday in Orlando, called Inter-American Business Consultants & Associates ''a classic Ponzi scheme.'' In a Ponzi scheme, early investors receive their dividends from money paid by new investors rather than from actual investments.

Lamstein, who works in Orlando, and Rouse, who is based in Titusville, told clients that they were investing in over-the-counter stocks, Lewis said. They promised returns as high as 180 percent every six months, he said.

Lewis said Lamstein and Rouse also informed clients that the investments came from a Jerry Friedman, who, they said, has a seat on the New York Stock Exchange.

The investigation by the comptroller's office, which began last month, found that Friedman was not registered on the exchange and that Lamstein and Rouse were not registered stockbrokers. Lewis said his office cannot locate Friedman.

In its lawsuit against Inter-American Business Consultants & Associates, Lewis' office accused Lamstein of using about $1.1 million of the investors' $2.18 million for personal benefit. The other $1.1 million of investors' money was used to pay dividends, according to the lawsuit.

Many of those who invested money live in Orange and Brevard counties, though some live outside Florida, Lewis said. They typically invested $5,000 or $10,000 each, he said.

Gerry Knittel, an engineer for McDonnell Douglas Astronautics Co. at Kennedy Space Center, said that he begged for the chance to invest through Inter-American Business Consultants & Associates after hearing about it from other engineers.

''Acquaintances of mine have been involved with this for four years,'' Knittel said. ''There are quite a few wealthy doctors involved that I know of and prominent people from Brevard County.''

Since investing $40,000 in April, Knittel said, he has received monthly dividend checks of $6,000 to $6,500. ''I've been getting an average return of 15 percent a month. It's terrific.''

Knittel said he did not know exactly what he was investing in but knew that his investment money was deposited into Lamstein's personal account. ''She said the investments were stocks, bonds, certificates and commodities such as coffee and metals.''

Lamstein could not be reached for comment Thursday. An employee at Inter- American Business Consultants & Associates said that Lamstein probably would not comment. When the comptroller's office contacted Lamstein, she denied any wrongdoing, Lewis said.

Most of the securities violations alleged by the comptroller's office occurred late last year and this year, Lewis said. An April 9 inquiry from a potential investor prompted the state's investigation.

However, Inter-American Business Consultants & Associates' problems began prior to 1985, according to JoAnne Richards, manager of the Better Business Council in Titusville.

After receiving complaints about the company from three investors in 1984, Richards said, she called the comptroller's office and the Brevard County state attorney's office.

Richards said she also conducted her own investigation. She found that Inter-American Business Consultants & Associates operated in North Miami Beach before 1982. Although the secretary of state's office involuntarily dissolved the company as a corporation in 1982 after the death of Lamstein's husband, Irving, Lamstein moved the company to Titusville, Richards said.

Inter-American Business Consultants & Associates had an occupational license in Titusville in 1982 but did not renew it, Richards said. The company continued to operate in Titusville until about a year ago, when it moved to Orlando, she said.